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February 17, 2004

CONTACT: Jerry Flanagan, (415) 633-1320

Pharmacists & Bush Administration Use Scare Tactics to Deter Drugs from Canada

FTCR says it is absurd for FDA and Bush Admin to claim it is unsafe to reimport U.S.-made drugs from Canada

SACRAMENTO, CA -- As California prepares to enter the national debate over prescription drug importation, key Bush Administration agencies have teamed up with the California Pharmacists Association to bring "a scare tactics" campaign to California, according to the Foundation for Taxpayer and Consumer Rights (FTCR).

Today's press conference by the FDA and state pharmacists association at the federal building in Sacramento is in response to two legislative proposals -- by Assembly Member Dario Frommer (D- Los Angeles) and Senate Pro Tem John Burton (D- San Francisco) -- to import lower cost drugs from abroad.

FTCR noted that the California Pharmacists Association, joining in today's press conference, has a direct financial interest in slowing the importation of drugs from outside the country. It is estimated that Americans spend $650-$700 million dollars annually on drugs from Canada and other countries. A large number of these drugs are produced by U.S. companies and sold elsewhere under bulk purchasing contracts at far lower costs to consumers.

The pharmacists and Bush Administration officials say drug importation is unsafe despite the fact that more than 40% of prescription drugs on the world market are produced by FDA approved facilities. The FDA has also opposed federal legislation aimed at reimporting U.S. made drugs from Canada and abroad.

"The U.S. needs affordable drugs because seniors must often choose between buying their medications and paying for rent and food. It is absolutely absurd for the FDA and the Bush Administration to claim that it is categorically unsafe to reimport U.S. made drugs," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. "Instead of addressing the problem of high cost prescriptions and assuring the safety of imported drugs, the FDA and the Bush Administration are using scare tactics to deter seniors. Meanwhile, consumers are paying for the obscenely high profits and bloated administrative costs of the Bush Administration's top campaign contributors."

According to the Center for Responsive Politics, pharmaceutical companies contributed $27 million in individual, PAC and soft money contributions to Congress in the 2002 election cycle -- 75% to republicans.

The Congressional Budget Office calculated that the reimportation of FDA approved U.S. made drugs would reduce federal expenditures for Medicaid by $2.9 billion between 2004 and 2013 and state expenditures by $240 million between 2004 and 2008.

The national campaign, which was unveiled in Illinois two weeks ago, is sponsored by the U.S. Department of Health and Human Services (HHS), the U.S. Food and Drug Administration (FDA), and the National Association of Boards of Pharmacy (NABP).

Each of the FDA's and pharmacists concerns fail to hold up under scrutiny, according to FTCR:

* Quality Assurance

The FDA says that it cannot assure the quality of imported drugs even though it is currently in the process of approving pharmaceutical production facilities in 25 countries, including Canada, South America, Australia and Israel.

A recent Minnesota survey found four of eight surveyed pharmacies could easily meet or exceeded state safety standards.

Despite the promising results, Peter Pitts of the FDA said the survey, "calls to the public's attention that these are very dangerous gray zones and that you can't really trade some savings for safety."

Kevin Goodno, the Minnesota Human Services commissioner, called the FDA's comments "an overstatement, and a fair amount of rhetoric is involved."

"We have no evidence at this time, in the context of Internet pharmacies, that there are unsafe products going to the United States," said Diane Gorman, assistant deputy minister of Health Canada.

(Source: Associated Press, February 13, 2004 -- Frederic J. Frommer)

* Generics

The FDA says that consumers should buy generics instead of purchasing from Canadian pharmacies. However , a loophole in the federal Drug Price Competition and Patent Term Restoration Act (the Hatch-Waxman Act) allows pharmaceutical companies to delay approval of generic alternatives. Under the law, pharmaceutical companies can file a patent infringement lawsuit against a generic company for any reason and automatically receive a 30-month stay on generic production while the case is litigated.

These stays provide brand name manufactures an additional 2 years of market exclusivity which generate sales that far outweigh litigation costs.

* Research and Development (R&D;)

Pharmaceutical companies claim that if they sold drugs in the U.S. at the same prices they offer in Canada and other countries there would not be enough revenue to provide for research and development costs of new drugs.

However, a 2000 report found that pharmaceutical companies had overstated their R&D; costs by as much as 5 times actual costs. Data also shows that up to half of the R&D; costs for some of the most expensive drugs (cancer and AIDS treatments) are paid for with taxpayer dollars.

Though drug companies often blame high research and development (R&D;) costs as the driving force behind double-digit annual increases in drug expenditures, the fact is that pharmaceutical industry spends two to three times more on advertising and marketing the newest drugs than they do on research and development.

* Counterfeit drugs

Counterfeit drugs have been a problem in the U.S. for years. There is no indication that importing drugs from abroad or reimporting drugs from Canada with minimal safe guards in place would add significantly to this problem. In fact, lower cost drugs in the U.S. market would actually lower the incentive for counterfeiters to produce unsafe drugs.

Additional safety checks could easily be paid for with money saved by purchasing lower costs drugs.

* H.R. 1, the Medicare Prescription Drug, Improvement and Modernization Act

On December 8, 2003, President Bush signed HR 1which effectively maintains the existing ban on importing prescription drugs until the FDA certifies their safety. The FDA has not initiated any review processes nor has it announced its intention to do so.

The Medicare prescription drug bill also bars the Medicare program from negotiating bulk discounts on prescription drugs like the Department of Veteran Affairs (DVA) and the Canadian government currently does.

* Untested Substances

U.S. and international drug companies commonly apply for approval for use in U.S. and Canadian markets simultaneously.

For example, Targeted Genetics Corporation (TGEN) was granted regulatory approval to begin its rheumatoid arthritis (RA) phase I clinical trial by the U.S. Food and Drug Administration and it's Canadian equivalent, Health Canada.

There is no evidence that the Health Canada approval process faces conflict of interest problems that could impact the fair and accurate approval of drugs at a greater incidence than the FDA in the U.S.


The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and non-partisan consumer advocacy organization. For more information visit us on the web at